As the cost of living crisis continues to escalate, Martin Lewis is encouraging everyone to check their payslips.
The consumer champion issued an unusually downbeat message to his 8.4million newsletter fans this week, as he addressed escalating living costs as taxes and energy bills surge.
On Twitter and speaking about his weekly newsletter, Mr Lewis wrote: “I felt sad asking my team to put this together.
“But my email bag is full of folk so desperate they can’t put the heat on … I wanted to try some help.”
Hi advice came after the money expert admitted that he had almost exhausted his supply of conventional money-saving tools when it came to energy bills.
Tips included investing in heated insoles, hot-water bottles and other energy-saving measures that Brits can turn to instead of switching on the central heating.
It also offered advice on the right clothes to wear and where to buy them most cheaply, and the psychological importance of socks and keeping one’s feet warm.
The floor is the coldest part of the house – so put your foot up on a stool when you are sitting down, it suggests.
But Mr Lewis also warned of the public of the four important financial checks that need to be done this week.
As the new tax year kicks in and higher national insurance takes effect, he said there are four steps all households should make.
“Check your new take home pay after NI 10%ish rise - Check your tax code is correct (legally your responsibility) - Get/fill up a LISA for £1,000 free cash for 1st time buyers - Grab or ditch cash ISAs,” he tweeted.
Check your payslip
Millions of workers will pay more tax on their earnings from this week as higher National Insurance comes into effect to help plug a gap in social care funding.
National Insurance payments increased by 1.25 percentage points on April 6, up from 12% to 13.25%.
You pay National Insurance on earnings above £9,850 a year but this threshold is rising to £12,570 in July.
For earnings above £50,270, the rate at which you pay National Insurance has also risen 1.25 percentage points to 3.25%, up from 2%.
You will need to check your pay slip to ensure you have been taxed the correct amount.
The Institute for Fiscal Studies (IFS) calculates that, taking the rate hike and threshold increase together, it will mean a fall in the National Insurance bill for those earning less than £35,000 for the 2022/23 tax year compared to the previous year.
Those earning more than £35,000 will pay more, the IFS calculates.
MoneySavingExpert founder Martin Lewis explains: ""If you're under that [amount], this is a gain, if you're over that [amount], then the two measures are a loss for you,” he said in a video posted to Twitter.
Martin added: "Effectively the way it works on earnings is from over around £9,600, all the way up to around £35,000, you will either not pay any more, or lower down [the pay scale], will pay less National Insurance than currently.
"If you earn £35,000 or more then the 1.25 percentage point increase outweighs the change in the starting threshold, so you will pay more National Insurance."
Here is how your National Insurance is changing, according to figures from the Institute For Fiscal Studies:
- £20,000 annual pay: NIC now - £104; NIC from April 6 - £112; NIC from July 6 - £82
- £30,000 annual pay: NIC now - £204; NIC from April 6 - £222; NIC from July 6 - £192
- £40,000 annual pay: NIC now - £304; NIC from April 6 - £333; NIC from July 6 - £303
- £50,000 annual pay: NIC now - £404; NIC from April 6 - £443; NIC from July 6 - £413
- £60,000 annual pay: NIC now - £423; NIC from April 6 - £472; NIC from July 6 - £443
- £70,000 annual pay: NIC now - £440; NIC from April 6 - £499; NIC from July 6 - £470
- £80,000 annual pay: NIC now - £457; NIC from April 6 - £526; NIC from July 6 - £497
- £90,000 annual pay: NIC now - £473; NIC from April 6 - £554; NIC from July 6 - £524
- £100,000 annual pay: NIC now - £490; NIC from April 6 - £581; NIC from July 6 - £551
Check your tax code
Tax codes are used by your employer or pension provider to work out how much tax is taken from your pay or pension.
It is made up of numbers and letters to represent how much you can earn before you start being taxed - and everyone on the PAYE system should have been given one by HMRC.
The most common code for the current tax year is 1257L for people who have one job or pension - although not everyone will be on this.
If you find you are on the wrong tax code, it means you could be paying too much tax each month - which is why you could be owed money back.
There are several ways you can find your tax code - the simplest way to check is to look at your latest payslip or your P45.
You can also ask your HR department if they can tell you your tax code.
The Gov.uk website has a dedicated webpage where you can see your tax code as well - to check it online, you will need to register for a government gateway ID.
For those who are on the most common 1257L tax code, this means you could earn £12,570 before being taxed in the 2021/22 tax year.
But not everyone should be on this tax code - for example, people who have more than one job.
Those who've been overpaying tax could claim thousands of pounds back - but it does depend on how much you've overpaid and for how long.
You can contact HMRC and ask them to investigate by calling 0300 200 3300, or by speaking to them online via their live chat service.
Get a Lifetime ISA
The deadline to open a Lifetime ISA for the previous tax year has now passed, but you can still get ahead of it for the new tax year.
If you have a LISA account, you can put away £4,000 each year and the government will give you a 25% bonus on top of the cash you save.
This means you can get £1,000 free each tax year - or £2,000 free if you’re in a couple and you both have a LISA account that you max out.
The bonus is paid monthly into your LISA and your money also accrues interest as well - although you only get a bonus on your contributions, not any interest gained.
You'll still get the bonus on smaller amounts too. So if you're only able to save £1,000 in one year, you'd get £250 from the government.
You can open a LISA account if you’re aged between 18 and 39 and the money can only be used to put a deposit toward your first home or for retirement.
But be warned, if you take out your money for anything other than these reasons, you’ll lose your bonus and pay a 25% penalty, which works out at around a 6% loss.
Check your ISA
The beginning of the tax year is by far the best time to take advantage of your new ISA allowance, whether as a lump sum, or by setting up a regular investment through a direct debit.
Getting it sorted now means your money will be sheltered from tax straight away, and positioned to take advantage of any share price rises.
But check if an ISA is the best savings platform for you, first.
ISAs are in addition to the new Personal Savings Allowance (PSA) which came into effect on April 6, 2016.
If you’re a basic rate taxpayer you can already earn up to £1,000 in savings income tax-free. For higher rate taxpayers, this is £500. That means the majority of people won't need an ISA to save tax free.
For example, if your current account provider has a savings account with a better interest rate, you might find it more convenient to pop your cash in there instead. Either way, it'll be tax-free.
